Smart Money Move: 1 Big FD or 10 Small FDs – Which Is Better for ₹10 Lakh?

single FD vs multiple FD: Saving money is not a one-day task. It requires patience, discipline, and choosing the right investment options. While risk-taking investors opt for high-risk options like the stock market, a large number of people still prefer safe investments. In India, fixed deposits are the biggest example of this trust.

Fixed Deposit Investment: Why It Remains Popular in India

The biggest advantage of a fixed deposit is the guaranteed return. Banks and NBFCs offer FD schemes of varying tenures with different interest rates. Therefore, choosing the right fixed deposit becomes crucial. But if you have ₹10 lakh to invest, a big question arises: should you create one single FD of ₹10 lakh or divide the money into 10 fixed deposits of ₹1 lakh each?

First, it's important to understand that if the interest rate and tenure are the same, there is no difference in the return. Let's say you invest ₹10 lakh in an FD for 10 years at 7% annual interest.

One Fixed Deposit of ₹10 Lakh: How It Works

• Investment: ₹10 lakh
• Tenure: 10 years
• Interest rate: 7% per annum
• Estimated interest: Approximately ₹9.67 lakh
• Maturity amount: Approximately ₹19.67 lakh

If you invest the same ₹10 lakh in 10 fixed deposits of ₹1 lakh each, and the interest rate remains the same, the total amount at maturity will be the same. So, where is the difference? The difference lies in convenience, liquidity, and security.

Multiple Fixed Deposits of ₹1 Lakh Each

The biggest advantage is simplicity. Just one fixed deposit, one maturity date, and less hassle. This is an easy option for people who don't need the money in between. However, if you suddenly need ₹50,000 or ₹1 lakh, you will have to break the entire ₹10 lakh fixed deposit. A penalty will be levied on the entire amount. Additionally, under DICGC rules, only up to ₹5 lakh (including interest) is insured per bank.

10 Small Fixed Deposits:

• The biggest advantage is better liquidity.
• If needed, you only have to break one FD, while the rest of your money remains safe and continues to earn interest.
• If you spread these FDs across 2-3 different banks, the entire ₹10 lakh can be covered under DICGC insurance.

Additionally, if interest rates rise in the future, the smaller FDs that mature can be reinvested at the new, higher rate. However, 10 separate fixed deposits mean more tracking, more dates to remember, and a little more effort.

If you prefer simplicity and don't anticipate needing the money before maturity, a single FD is fine. But if you value flexibility, security, and better cash management, then 10 smaller FDs are a more prudent option.

Also Read - SBI FD Rate Cut May 2025: Check New Interest Rates & Amrit Vrishti Update